Why is it Important for Private Labels to Innovate? : The Effects on Trust and WOM.

Abstract

There is growing evidence that private label brands have become more innovative (DelVecchio, 2001; Mintel, 2009). Private labels have been considered of special importance in recent years for retailer strategy and have clearly evolved through time. Private labels are becoming more sophisticated and are delivering a broader and more complex portfolio (Kumar and Steenkamp, 2007). The latest generation of private labels is positioned around innovation and quality. They originated in the UK, where they are critical for the strategy of some of the most important retailers (Burt, 2000; Verhoef et al., 2004). Despite this new trend, the impact of private label innovativeness on store image and customer relationships has not yet been investigated. The purpose of this paper is to examine how consumer perceptions of private-label innovativeness influence retailers’ store image and their relationships with their customers.